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Nova Reports Third Quarter 2020 Results

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REHOVOT, Israel, Nov. 12, 2020 /PRNewswire/ -- Nova (Nasdaq: NVMI) today announced financial results for the third quarter 2020, the period ended September 30, 2020.

Business Highlights:

  • Record quarterly revenue of $69.5 million, up 32% year-over-year

  • GAAP net income of $13.9 million, or $0.48 per diluted share, up 60% year-over-year on a per-share basis

  • Non-GAAP net income of $16.5 million, or $0.57 per diluted share, up 43% year-over-year on a per-share basis

  • Record quarterly optical standalone revenues, driven by growing demand for Nova's unique dimensional metrology solutions

  • In October, completed a private offering of $200 million of 0% convertible senior notes due 2025

GAAP Results ($K)


Q3 2020

Q2 2020

Q3 2019

Revenues

$69,485

$62,586

$52,507

Net Income

$13,896

$8,672

$8,562

Earnings per Diluted Share

$0.48

$0.30

$0.30

NON-GAAP Results ($K)


Q3 2020

Q2 2020

Q3 2019

Net Income

$16,511

$13,774

$11,507

Earnings per Diluted Share

$0.57

$0.48

$0.40

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements that are part of this release. Non-GAAP results exclude amortization of acquired intangible assets, stock-based compensation expenses, expense related to a transaction made by a financial institution without Company authorization, facilities transition costs, revaluation of long-term liabilities and tax effect of non-GAAP adjustments.

Management Comments

"Nova's outstanding financial results for the quarter exceeded our previous expectations and guidance. These results demonstrate the resilience of our operational model and the strategic value we bring to our customers while they continue developing their next generation technology nodes," commented Eitan Oppenhaim, President and Chief Executive Officer. "Following our strong operational execution in 2020, we remain confident in our strategy and the value we create, which provide us a solid base to deliver our long-term growth objectives."

2020 Fourth Quarter Financial Outlook

Management provided an outlook for the fourth quarter, the period ending December 31, 2020. Based on current estimates, management expects:

  • $66 million to $73 million in revenue

  • $0.32 to $0.43 in diluted GAAP EPS

  • $0.45 to $0.56 in diluted non-GAAP EPS

2020 Third Quarter Results

Total revenues for the third quarter of 2020 were $69.5 million, an increase of 11.0% compared with the second quarter of 2020 and an increase of 32.3% compared with the third quarter of 2019.

Gross margin for the third quarter of 2020 was 57.1%, compared with a gross margin of 58.5% in the second quarter of 2020, and compared with a gross margin of 52.4% in the third quarter of 2019.

Operating expenses in the third quarter of 2020 were $24.1 million, compared with $26.3 million in the second quarter of 2020 and compared with $21.0 million in the third quarter of 2019.

On a GAAP basis, the Company reported net income of $13.9 million, or $0.48 per diluted share, in the third quarter of 2020. This is compared with net income of $8.7 million, or $0.30 per diluted share, in the second quarter of 2020, and compared with net income of $8.6 million, or $0.30 per diluted share, in the third quarter of 2019.

On a non-GAAP basis, which excludes amortization of acquired intangible assets, stock-based compensation expenses, one-time expense related to a transaction made by a financial institution without Company authorization, facilities transition costs, revaluation of long-term liabilities and tax effect of non-GAAP adjustments, the Company reported net income of $16.5 million, or $0.57 per diluted share, in the third quarter of 2020. This is compared with net income of $13.8 million, or $0.48 per diluted share, in the second quarter of 2020, and compared with net income of $11.5 million, or $0.40 per diluted share, in the third quarter of 2019.

Conference Call Information

Nova will host a conference call today, November 12, 2020, at 9 a.m. Eastern Time, to discuss the financial results and outlook. To attend the conference call, please dial one of the following teleconferencing numbers. Please begin by placing your calls five minutes before the conference call commences. If you are unable to connect using the toll-free numbers, please try the international dial-in number.

U.S. TOLL-FREE Dial-in Number: 1-888-394-8218
ISRAEL TOLL-FREE Dial-in Number: 1-809-212-883
INTERNATIONAL Dial-in Number: 1-323-701-0225

At:

9 a.m. Eastern Time
6 a.m. Pacific Time
4 p.m. Israel Time
Please reference conference ID: 1420148

The conference call will also be webcast live from a link on Nova's website at https://www.novami.com/investors/events/.

A replay of the conference call will be available from November 12, 2020 at 12 p.m. Eastern Time to November 19, 2020 at 11:59 p.m. Eastern Time. To access the replay, please dial one of the following numbers:

Replay Dial-in TOLL-FREE: 1-844-512-2921
Replay Dial-in TOLL/INTERNATIONAL: 1-412-317-6671
Replay Pin Number: 1420148

A replay will also be available for 90 days on Nova's website at https://www.novami.com/investors/events/.

About Nova: Nova is a leading innovator and key provider of metrology solutions for advanced process control used in semiconductor manufacturing. Nova delivers continuous innovation by providing state-of-the-art high-performance metrology solutions for effective process control throughout the semiconductor fabrication lifecycle. Nova's product portfolio, which combines high-precision hardware and cutting-edge software, provides its customers with deep insight into the development and production of the most advanced semiconductor devices. Nova's unique capability to deliver innovative x-ray and optical solutions enables its customers to improve performance, enhance product yields and accelerate time to market. Nova acts as a partner to semiconductor manufacturers from its offices around the world. Additional information may be found at www.novami.com.

Nova is traded on the NASDAQ & TASE under the symbol NVMI.

This press release provides financial measures that exclude amortization of acquired intangible assets, stock-based compensation expenses, expense related to a transaction made by a financial institution without Company authorization, facilities transition costs, revaluation of long-term liabilities, tax effect of non-GAAP adjustments and amortization of debt discount and issuance costs, as applicable, and are therefore not calculated in accordance with generally accepted accounting principles (GAAP). Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding Nova's performance because they reflect our operational results and enhance management's and investors' ability to evaluate Nova's performance before charges or benefits considered by management to be outside Nova's ongoing operating results. The presentation of this non-GAAP financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. Management believes that it is in the best interest of its investors to provide financial information that will facilitate comparison of both historical and future results and allow greater transparency to supplemental information used by management in its financial and operational decision making. A reconciliation of each GAAP to non-GAAP financial measure discussed in this press release is contained in the accompanying financial tables..

This press release contains forward-looking statements within the meaning of safe harbor provisions of the Private Securities Litigation Reform Act of 1995 relating to future events or our future performance, such as statements regarding, but are not limited to, anticipated growth opportunities and projections about our business and its future revenues, expenses and profitability. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied in those forward-looking statements. Factors that may affect our results, performance, circumstances or achievements include, but are not limited to, the following: our dependency on three product lines; our dependency on a small number of large customers and small number of suppliers; the highly cyclical and competitive nature of the markets we target and we operate in; our inability to reduce spending during a slowdown in the semiconductor industry; our ability to respond effectively on a timely basis to rapid technological changes; our dependency on PEMs; risks related to exclusivity obligations and non-limited liability that may be included in our commercial agreements and arrangements; our ability to retain our competitive position despite the ongoing consolidation in our industry; risks related to our dependence on our manufacturing facilities; risks related to changes in our order backlog; risks related to efforts to complete and integrate current and/or future acquisitions; risks related to worldwide financial and economic instabilities, including the implications of the ongoing novel coronavirus (COVID-19) pandemic; risks related to our intellectual property; new product offerings from our competitors; unanticipated manufacturing or supply problems; risks related to government programs we participate in; risks related to taxation; changes in customer demand for our products; risks related to currency fluctuations; risks related to technology security threats, including data breaches, cyberattacks and system disruptions, and changes in privacy laws; risks related to acquisitions we may pursue and risks related to our operations in Israel. We cannot guarantee future results, levels of activity, performance or achievements. The matters discussed in this press release also involve risks and uncertainties summarized under the heading "Risk Factors" in Nova's Annual Report on Form 20-F for the year ended December 31, 2019 filed with the Securities and Exchange Commission on March 12, 2020. These factors are updated from time to time through the filing of reports and registration statements with the Securities and Exchange Commission. Nova Measuring Instruments Ltd. does not assume any obligation to update the forward-looking information contained in this press release.

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands) - (Unaudited)



As of


ASSETS


September 30,

2020


December 31,

2019


Current assets






Cash and cash equivalents


32,713


31,748


Short-term interest-bearing bank deposits


200,676


154,533


Trade accounts receivable


41,097


51,603


Inventories


62,063


48,362


Other current assets


11,899


17,122








Total current assets


348,448


303,368








Non-current assets






Interest-bearing bank deposits


2,824


2,813


Restricted interest-bearing bank deposits


2,000


2,000


Deferred tax assets


5,282


4,554


Severance pay funds


1,197


1,210


Right of-use assets


29,508


28,256


Property and equipment, net


32,491


30,566


Intangible assets, net


5,684


7,562


Goodwill


20,114


20,114








Total non-current assets


99,100


97,075








Total assets


447,548


400,443



Liabilities and shareholders' Equity






Current liabilities






Trade accounts payable


22,733


20,706


Deferred revenues


3,791


2,256


Operating lease current liabilities


2,391


2,236


Other current liabilities


26,303


21,751








Total current liabilities


55,218


46,949








Non-current liabilities






Accrued severance pay


2,139


2,120


Operating lease long-term liabilities


31,875


31,077


Other long-term liability


6,616


5,758








Total non-current liabilities


40,630


38,955








Shareholders' equity


351,700


314,539








Total liabilities and shareholders' equity


447,548


400,443


NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(U.S. dollars in thousands, except per share data) - (Unaudited)




Three months ended


Nine months ended


September 30,

2020


September 30,

2019


September 30,

2020


September 30,

2019









Revenues:








Products

54,757


38,723


147,579


120,185

Services

14,728


13,784


45,514


40,099

Total revenues

69,485


52,507


193,093


160,284









Cost of revenues:








Products

20,732


16,342


55,922


48,446

Services

9,096


8,672


26,571


24,651

Total cost of revenues

29,828


25,014


82,493


73,097









Gross profit

39,657


27,493


110,600


87,187









Operating expenses:








Research and development expenses, net

12,957


10,548


37,262


34,786

Sales and marketing expenses

7,406


7,156


21,232


20,943

General and administrative expenses

3,141


2,658


11,505


7,564

Amortization of acquired intangible assets

625


657


1,877


1,969

Total operating expenses

24,129


21,019


71,876


65,262









Operating income

15,528


6,474


38,724


21,925









Financing income, net

846


887


2,261


2,252









Income before tax on income

16,374


7,361


40,985


24,177









Income tax expenses

2,478


(1,201)


6,735


1,391









Net income for the period

13,896


8,562


34,250


22,786









Earnings per share:








Basic

0.49


0.31


1.22


0.82

Diluted

0.48


0.30


1.18


0.80









Shares used for calculation of earnings per share:








Basic

28,168


27,826


28,080


27,935

Diluted

29,020


28,474


28,933


28,599

NOVA MEASURING INSTRUMENTS LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands) - (Unaudited)



Three months ended


Nine months ended


September 30,

2020


September 30,

2019


September 30,

2020


September 30,

2019

Cash flows from operating activities:








Net income for the period

13,896


8,562


34,250


22,786

Adjustments to reconcile net income to net cash
provided by (used in) operating activities:








Depreciation and amortization

2,447


3,842


7,133


9,312

Share-based compensation

1,946


1,364


4,718


3,662

Change in deferred tax assets, net

(182)


(410)


(728)


(754)

Change in accrued severance pay, net

4


25


32


52

Change in trade accounts receivable

3,360


1,024


10,506


6,477

Change in inventories

(6,582)


(1,332)


(15,052)


(9,187)

Change in other current and long-term assets

484


(7,180)


5,223


(4,600)

Change in trade accounts payable

1,362


1,700


2,027


(426)

Change in other current and long-term liabilities

2,227


3,247


4,530


(1,332)

Change in short term deferred revenues

2,626


(1,599)


1,535


(269)









Net cash provided by (used in) operating activities

21,588


9,243


54,174


25,721









Cash flow from investment activities:








Change in short-term and long-term interest-bearing bank
deposits

(13,161)


(6,040)


(46,154)


35

Purchase of property and equipment

(1,713)


(7,928)


(4,873)


(15,621)









Net cash provided by (used in) investment activities

(14,874)


(13,968)


(51,027)


(15,586)









Cash flows from financing activities:








Purchases of treasury shares

-


-


(2,549)


(7,159)

Shares issued upon exercise of options

114


95


367


367









Net cash used in financing activities

114


95


(2,182)


(6,792)









Increase (decrease) in cash and cash equivalents

6,828


(4,630)


965


3,343

Cash and cash equivalents – beginning of period

25,885


32,850


31,748


24,877

Cash and cash equivalents – end of period

32,713


28,220


32,713


28,220










NOVA MEASURING INSTRUMENTS LTD.

RECONCILIATION OF GAAP TO NON-GAAP RESULTS

(U.S. dollars in thousands, except percentage and per share data) - (Unaudited)



Three months ended


September 30,
2020


June 30,
2020


September 30,
2019

GAAP gross profit

39,657


36,601


27,493

Stock-based compensation expenses *

414


279


277

Facilities transition costs

-


-


220

Non-GAAP gross profit

40,071


36,880


27,990

GAAP gross margin as a percentage of revenues

57%


58%


52%

Non-GAAP gross margin as a percentage of revenues

58%


59%


53%







GAAP operating income

15,528


10,315


6,474

Stock-based compensation expenses *

1,946


1,454


1,364

Amortization of acquired intangible assets

625


626


657

One-time expense related to a transaction made by a
financial institution without Company authorization

-


3,000


-

Facilities transition costs

-


-


888

Non-GAAP operating income

18,099


15,395


9,383

GAAP operating margin as a percentage of revenues

22%


16%


12%

Non-GAAP operating margin as a percentage of revenues

26%


25%


18%







GAAP net income

13,896


8,672


8,562

Stock-based compensation expenses *

1,946


1,454


1,364

Amortization of acquired intangible assets

625


626


657

One-time expense related to a transaction made by a
financial institution without Company authorization

-


3,000


-

Facilities transition costs

-


-


888

Revaluation of long-term liabilities

161


594


362

Tax effect of non-GAAP adjustments

(117)


(572)


(326)

Non-GAAP net income

16,511


13,774


11,507







GAAP basic earnings per share

0.49


0.31


0.31

Non-GAAP basic earnings per share

0.59


0.49


0.41







GAAP diluted earnings per share

0.48


0.30


0.30

Non-GAAP diluted earnings per share

0.57


0.48


0.40







Shares used for calculation of earnings per share:






Basic

28,168


28,039


27,826

Diluted

29,020


28,888


28,474








* Stock-based compensation expenses for the three months ended September 30, 2020 included in – Cost of revenues products - 259; Cost of revenues services - 155; Research and development expenses, net – 713; Sales and marketing expenses – 409; General and administrative expenses – 410


NOVA MEASURING INSTRUMENTS LTD.

SUPPLEMENTAL INFORMATION - RECONCILIATION OF FOURTH QUARTER 2020

GAAP TO NON-GAAP GUIDANCE

(Unaudited)



Low


High

Estimated GAAP net income per diluted share

0.32


0.43

Estimated non-GAAP items:




Stock-based compensation expenses

0.09


0.09

Amortization of acquired intangible assets

0.02


0.02

Amortization of debt discount and issuance costs

0.03


0.03

Tax effect of non-GAAP adjustments

(0.01)


(0.01)

Estimated non-GAAP net income per diluted share

0.45


0.56

Company Contact:

Investor Relations Contact:

Dror David, Chief Financial Officer

Miri Segal

Nova Measuring Instruments Ltd.

MS-IR LLC

Tel: +972-73-229-5760

Tel: +917-607-8654

E-mail: info@novami.com

E-mail: msegal@ms-ir.com

www.novami.com


Cision
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SOURCE Nova